How much do you know about health care costs & retirement?

Happy New Year! I thought I would make my first blog of the year about protecting yourself. It is my job to make sure I protect my clients and what is important to you. I came across some very interesting information and statistics I thought I should share. This will help you help you plan to protect yourselves and your family accordingly.

How much do you really know about health care costs in retirement? Not enough is my personal answer. So I did some research.

While it is good news that the amount of savings needed for health expenses for people on Medicare continues to decline, it is a long way from a zero sum.

Enhanced prescription drug coverage has cut individual costs by between 2 and 10 percent a year. But, according to the Employee Benefit Research Institute (EBRI), a married couple will still need to find an average of $326,000 to have a 90 percent chance of meeting their health care expenses in retirement.

In fact, Medicare only covers 62 percent of costs for beneficiaries.

There is another alarming fact. None of the figures I have just quoted include the skyrocketing costs of long term care which estimates suggest most (perhaps as much as 70 percent), people over 65 will need at some point.

Current long term care costs are approaching the $100,000 a year mark and the average time people spend in care is about two years. So that adds another $200,000 each to potential costs -- or $400,000 per couple.

Add all these numbers together and we're not far short of three quarters of a million dollars of possible health-related costs for a couple in retirement.

Many employees may not be aware of these worrying numbers, but rather than present them negatively, you can help offer them solutions in three critical ways:

• Encourage them to maximize their contributions to 401ks and IRAs
• Introduce or strengthen participation in health savings accounts
• Invite them to investigate and consider the benefits of long term care (LTC) insurance

In the past, LTC insurance has been somewhat of a contentious issue. While it's true, it may not be for everyone -- taking into account things like longevity expectations for instance -- it definitely merits investigation.

Of course, I'd be happy to help with these or any other issues you may have about protecting their needs in retirement. Remember, I'm just a call away and always ready for a totally commitment free chat.